Starting a Limited Liability Company (LLC) is one of the most popular ways for entrepreneurs to structure their businesses.
It provides a balance of flexibility and protection that many business owners seek. In Illinois, the process to start an LLC is straightforward, but like any legal or business formation process, it involves several important steps. If you’re looking to start an LLC in Illinois in 2025, you’ve come to the right place.
In this guide, we will take you through all the steps you need to follow to form your LLC in Illinois, along with tips, potential pitfalls, and frequently asked questions to help you along the way.
The Steps to Forming an LLC in Illinois
1. Search Your LLC Name
Before you start the process of forming your LLC in Illinois, one of the first things you need to do is choose your business name. This is a crucial step, as your LLC name will represent your business identity.
What Should You Keep in Mind?
Your LLC name must meet the following requirements:
- Unique: The name must be distinguishable from other businesses that are already registered in Illinois. If someone else is using your desired name or a similar name, you won’t be able to use it for your LLC.
- Include Required Words: The name must include the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.”
- Not Misleading: The name cannot suggest that your LLC is something it is not. For example, you can’t use terms like “bank” or “insurance” unless your business has been authorized to do so.
To check whether your name is available, you can search the Illinois Secretary of State’s business entity database. This will let you know if another business is already using the name you want. If the name is taken, you’ll need to come up with a new one.
Can You Reserve Your Name?
If you have a specific name in mind but you’re not ready to file your LLC yet, you can reserve the name for 90 days. This can be done by filing Form LLC-1.15 with the Illinois Secretary of State’s office, which costs $25.
2. Choose a Registered Agent
In Illinois, every LLC must designate a registered agent. A registered agent is a person or business entity that is authorized to receive legal documents and government notices on behalf of your LLC. These documents may include service of process (in the event of a lawsuit), tax notices, and other important communications from the state.
Who Can Be an LLC Registered Agent?
Your registered agent must meet specific requirements:
- Physical Address: The agent must have a physical street address in Illinois (P.O. boxes are not allowed).
- Availability: The agent must be available during normal business hours to receive legal documents.
- Eligibility: The agent can be an individual or a business entity, but they must be authorized to do business in Illinois.
You can choose to serve as your own registered agent, or you can appoint someone else. Many business owners prefer to use a professional registered agent service. This ensures they don’t miss important legal documents and helps protect their privacy, as the agent’s address will be listed publicly rather than your own.
Why Consider Professional Registered Agent Services?
While you can be your own registered agent, hiring a professional service has some benefits:
- Privacy: Using a professional service ensures your personal address is not listed on public records.
- Reliability: A professional registered agent is always available to receive documents, so you never miss an important notice.
- Convenience: Many services offer additional features, such as document forwarding and access to online portals, making it easier to manage your LLC.
Some popular registered agent services include companies like Northwest Registered Agent, which provide reliable service with a focus on privacy and compliance.
3. File Articles of Organization
The Articles of Organization is the document that officially creates your LLC in Illinois. You will need to file this form with the Illinois Secretary of State. The filing fee is $150, which can be paid online, by mail, or in person.
What Information Is Required?
When filing your Articles of Organization, you will need to provide the following details:
- LLC Name: The name of your LLC must match exactly what you reserved or chose in the previous step.
- Registered Agent: The name and address of your LLC’s registered agent.
- Management Structure: You will need to specify whether your LLC will be managed by its members (owners) or by appointed managers.
- Business Address: The physical address of your LLC in Illinois.
- Signature: The signature of the person filing the Articles of Organization (the organizer).
You can file your Articles of Organization online through the Illinois Secretary of State’s website, which is typically faster, or by mail if you prefer. Filing online generally takes around 10-14 business days, while filing by mail can take 4-6 weeks to process. If you need expedited processing, you can pay an additional fee.
4. Create an Operating Agreement
Although Illinois does not require LLCs to have an Operating Agreement, it is highly recommended. An Operating Agreement is an internal document that outlines the ownership and management structure of your LLC. It also establishes the rights and responsibilities of the members (owners).
Why Do You Need an Operating Agreement?
- Clarifies Roles and Responsibilities: The Operating Agreement helps clarify the roles of each member and what they are responsible for within the company.
- Avoids Disputes: By having written agreements in place, the chances of disputes arising between members are reduced.
- Tax Flexibility: It can help establish how profits and losses will be distributed, which is important for tax purposes.
- Legal Protection: Having a clear Operating Agreement can help protect your LLC status in case of a legal dispute.
An Operating Agreement typically includes:
- The percentage of ownership of each member.
- The duties and powers of each member or manager.
- How profits and losses will be allocated among members.
- Procedures for transferring ownership or adding new members.
- How the LLC will be dissolved if necessary.
Even if you are the sole member of the LLC, it is a good idea to create an Operating Agreement to establish formal business practices.
5. Obtain an EIN (Employer Identification Number)
An EIN (also known as a Federal Tax Identification Number or TIN) is a unique number assigned to your LLC by the IRS. This number is used for tax purposes, to hire employees, and to open a business bank account.
How Do You Get an EIN?
You can apply for an EIN for free through the IRS website. The application process is simple and takes only a few minutes. You will need to provide basic information about your LLC, such as its legal name, business address, and the name of the responsible party (usually the LLC’s owner).
Most LLCs will need an EIN, but there are some exceptions. If you are a single-member LLC and plan to file taxes as an individual (using your Social Security Number), you may not need an EIN. However, if you plan to hire employees, open a business bank account, or elect to be taxed as a corporation, you will definitely need one.
6. Register with the Illinois Department of Revenue
Depending on the nature of your business, you may need to register with the Illinois Department of Revenue (IDOR) for state taxes. Common taxes you might need to register for include:
- Sales Tax: If your business sells tangible goods or certain services, you must collect and remit sales tax.
- Use Tax: If you purchase taxable goods for use in Illinois, you may be required to pay use tax.
- Employee Withholding Tax: If you have employees, you will need to register for employee withholding tax and withhold Illinois income tax from their wages.
- Unemployment Insurance Tax: If you have employees, you will also need to register for unemployment insurance taxes.
You can register with the IDOR online using their MyTax Illinois portal. The process is quick, and you will be provided with a registration number, which you will use when filing tax returns or making payments.
What to Do After Your LLC Is Approved
Once your LLC is formed and approved by the state, there are a few additional steps and ongoing requirements to keep in mind.
How Much Does an Illinois Annual Report Cost?
Illinois requires every LLC to file an Annual Report with the Secretary of State. The filing fee for the annual report is $75. This report keeps your LLC’s information up to date in the state’s records, such as the business address, the registered agent’s address, and the names of managers or members.
When Is the Annual Report Due?
The Annual Report is due every year on the first day of the anniversary month of your LLC’s formation. For example, if your LLC was formed in March, your annual report will be due every year in March.
When Is My First Annual Report Due?
Your first annual report is due the year following the formation of your LLC. For example, if you formed your LLC in March 2025, your first report will be due in March 2026.
How Do I File My LLC Annual Report?
The Annual Report can be filed online through the Illinois Secretary of State’s website. It’s a simple process that only takes a few minutes to complete. Once filed, you will receive confirmation from the Secretary of State’s office.
How Will My LLC Be Taxed?
By default, LLCs are considered pass-through entities for tax purposes, which means that the LLC itself doesn’t pay taxes. Instead, profits and losses are passed through to the members, who report them on their personal income tax returns.
However, you can choose to have your LLC taxed as a corporation by filing an election with the IRS. There are two options:
- S Corporation Taxation: If you meet certain requirements, you can elect to have your LLC taxed as an S Corporation. This can be beneficial for some businesses because it may reduce self-employment taxes.
- C Corporation Taxation: Your LLC can also choose to be taxed as a C Corporation, but this means the LLC will be taxed separately from its members, and it will face corporate tax rates.
Illinois State Agency Contact Information
Illinois Secretary of State
If you need assistance with filing your LLC or have questions about business formation in Illinois, the Illinois Secretary of State’s office is your primary point of contact.
- Phone: (217) 782-6961
- Website: Illinois Secretary of State
Illinois Department of Revenue
For any tax-related inquiries or to register for Illinois state taxes, contact the Illinois Department of Revenue.
- Phone: (217) 782-3336
- Website: Illinois Department of Revenue
Conclusion
Starting an LLC in Illinois is a relatively straightforward process, but it’s important to follow each step carefully. By choosing the right name, filing the necessary documents, and keeping track of ongoing requirements like your Annual Report, you can set your LLC up for success. Whether you’re starting a business on your own or with partners, taking the time to understand the steps involved will pay off in the long run.
Now that you know the steps to starting your LLC in Illinois, you can confidently move forward with launching your business. Good luck!
Illinois LLC FAQs
Do I Need a Lawyer to Start an LLC in Illinois?
No, you do not need a lawyer to form an LLC in Illinois. The process is relatively simple, and many people choose to file the necessary forms on their own. However, consulting with an attorney may be beneficial, especially if you have complex legal needs or want assistance with your Operating Agreement.
Can I Start an LLC in Illinois If I Don’t Live There?
Yes, you can form an LLC in Illinois even if you are not a resident of the state. You will just need to have a registered agent with a physical address in Illinois.
Can I Change My LLC Name After Formation?
Yes, you can change your LLC’s name after it has been formed. To do so, you will need to file an amendment to your Articles of Organization with the Illinois Secretary of State, and there will be a filing fee associated with the change.